Publisher Chaille Brindley comments on the industry lawsuits between the NWPCA and developers of the new Best Load software, calls for reconciliation to bring industry together.

By Chaille M. BrindleyDate Posted: 9/1/2010

Many readers are familiar with the lawsuit filed by the National Wooden Pallet & Container Association (NWPCA) against Dr. Mark White over the new Best Load software. I wrote about it in my March Pallet Enterprise letter. My message is almost exactly the same today as it was then. The only real difference is that one lawsuit has turned into a second and two counter lawsuits. To see a full news update on the lawsuits, read the story on page 22.

This is a difficult situation to write about because no matter what I put down on paper, the topic is covered with landmines. Yet, my job is to provide independent analysis. So in this difficult spot, I am reminded of what Proverbs 15:1 encourages. It says, “A gentle answer turns away wrath, but a harsh word stirs up anger.” I will attempt to be as fair, honest and yet gracious as possible in these comments. Know that my heart’s desire is to see reconciliation.

The counter lawsuits have changed the picture of the legal landscape in this situation and certainly increased the stakes.

The future of the Pallet Design System (PDS) now hangs in the balance as Mark White and PalletOne, which has funded development of Best Load, have challenged the NWPCA’s ownership claims to PDS. All sides have a lot riding on the outcome. That is exactly why I believe a settlement is in order. Both sides are spending hundreds of thousands in legal fees and that is before any of these cases goes to trial.

The primary claim by the NWPCA that seems to have the most teeth is the violation by PalletOne of the lease terms of agreement. NWPCA claims that by allowing Mark White to use PDS in testing comparisons with Best Load, PalletOne violated the lease agreement. PalletOne contends that it bought an extra lease for White to use and that he did so legally since White and Company was being operated as a subsidiary. PalletOne also contends that the NWPCA’s copyright claims are invalid, and as such, it could not have violated proprietary rights that belonged to NWPCA.

Privately, both sides make strong arguments. The NWPCA has spent lots of money developing the program and filed copyrights seeking federal protection. At the same time some federal and state money and resources also went into developing the program.

The NWPCA points to a 2001 agreement purporting to transfer PDS ownership to the association as the basis for its copyrights to PDS. White contends that the 2001 agreement was not carried out according to university protocol or signed by an authorized agent of the university. Having thoroughly reviewed Virginia Tech policies, it appears that the agreement was not finalized following Virginia Tech guidelines, which does raise questions about the validity of the contract. Regardless, Virginia Tech still could side with either party in the case.

The NWPCA suggests that actions by Mark White and Howe Wallace, president and CEO of PalletOne, violated their fiduciary duty to the association as well as improperly used a PDS license. White served on a number of NWPCA committees, and Wallace was a member of the board of directors from 2006 to 2009. NWPCA claims that White and Wallace should have disclosed their software development activities. I can see how these allegations seem valid. Yet, at the same time, I have not seen any evidence that either White or Wallace voted or tried to direct NWPCA activities in such a way to submarine PDS in favor of their own software project.

Whether or not you believe they violated their duties to the association depends on how far you want to stretch those requirements. This should give any member pause because you never know how this will be interpreted. Remember, White and Company claimed from the beginning that its focus was not to compete against PDS.

Personally, I believe it would have been wise for Wallace to resign his board position. Also, it might have been smart for White to have limited his NWPCA activities or involvement. But it doesn’t appear that White was attempting to be anything other than helpful by his involvement on both the research and standards committees. Note that he was not on the PDS committee.

Any attempt to paint the picture that White stole the strategy for developing systems-based design for transport packaging and unit loads is simply ludicrous. Mark developed and pioneered those concepts. He started trying to get the NWPCA to develop those capabilities as early as 2004. But the association decided to focus first on an improved graphical interface for PDS. The NWPCA made this decision based on customer requests and concern over competition from a foreign software firm.

Certainly, Mark White kept the development of Best Load a secret as well as his relationship with PalletOne. White recently admitted to starting working on the project even while working at Virginia Tech, which was under contract with the NWPCA to continue to develop PDS improvements at that time. White opted to work on Best Load after it became clear that the NWPCA intended to take PDS development in-house and as he said “deprive” the Center for Unit Load Design of a much needed revenue stream. Depending on your perspective, this may be enough to convince you that Mark White is a bad actor or you may understand his desire to protect the Center that he and others took years to build.

At the core of the issue is the breaking down of the relationship between the NWPCA and the staff at the Center for Unit Load Design and the Sardo Pallet Lab at Virginia Tech. For years, the NWPCA, Virginia Tech and Pallet Enterprise have been the three legged stool that help spur growth, communications and development in the pallet industry in the United States. The relationships between the NWPCA and the other major entities have been strained in recent years, especially when it comes to Virginia Tech. Hopefully, these relationships can be restored in time. I sincerely look toward the potential for greater collaboration of all three cogs of the pallet industry.

So where do we go from here? By the time this issue goes to press, the entire ordeal could be over because both sides must attend a settlement conference in August for the first federal lawsuit. But it all depends on how much each side digs in. The longer the case rolls on, the more both sides will spend in legal fees.

When it comes to major lawsuits, I think that everyone would agree that long, unnecessary legal battles help nobody except for maybe the lawyers. At the same time, all parties involved have the right and obligation to defend their rights and protect their institutions and intellectual property.

Many of the arguments in the PDS lawsuits are muddy grey at best. I don’t believe that either side has totally clean hands. I compare it to two married people who both do things to undermine the relationship until there is a harsh separation. The blame game doesn’t necessarily get you toward a resolution. And I believe that reconciliation is a better end goal than victory at all costs.

At the end of the day, I just want to ask, “Can’t we all just get along?”